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Buying Up the Planet: Out-of-control Central Banks on a Corporate Buying Spree

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financial warfare by wired.com

Finance is the new form of warfare -- without the expense of a military overhead and an occupation against unwilling hosts. It is a competition in credit creation to buy foreign resources, real estate, public and privatized infrastructure, bonds and corporate stock ownership. Who needs an army when you can obtain the usual objective (monetary wealth and asset appropriation) simply by financial means? -- Dr. Michael Hudson, Counterpunch, October 2010

When the US Federal Reserve bought an 80% stake in American International Group (AIG) in September 2008, the unprecedented $85 billion outlay was justified as necessary to bail out the world's largest insurance company. Today, however, central banks are on a global corporate buying spree not to bail out bankrupt corporations but simply as an investment, to compensate for the loss of bond income due to record-low interest rates. Indeed, central banks have become some of the world's largest stock investors.

Central banks have the power to create national currencies with accounting entries, and they are traditionally very secretive. We are not allowed to peer into their books. It took a major lawsuit by Reuters and a congressional investigation to get the Fed to reveal the $16-plus trillion in loans it made to bail out giant banks and corporations after 2008.

What is to stop a foreign bank from simply printing its own currency and trading it on the currency market for dollars, to be invested in the US stock market or US real estate market? What is to stop central banks from printing up money competitively, in a mad rush to own the world's largest companies?

Apparently not much. Central banks are for the most part unregulated, even by their own governments. As the Federal Reserve observes on its website:

[The Fed] is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms.

As former Federal Reserve Chairman Alan Greenspan quipped, "Quite frankly it does not matter who is president as far as the Fed is concerned. There are no other agencies that can overrule the action we take."

The Central Bank Buying Spree

That is how "independent" central banks operate, but it evidently not the US central bank that is gambling in the stock market. After extensive quantitative easing, the Fed has a $4.5 trillion balance sheet; but this sum is accounted for as being invested conservatively in Treasuries and agency debt (although QE may have allowed Wall Street banks to invest the proceeds in the stock market by devious means).

Which central banks, then, are investing in stocks? The biggest player turns out to be the People's Bank of China (PBoC), the Chinese central bank.

According to a June 15th article in USA Today:

Evidence of equity-buying by central banks and other public sector investors has emerged from a large-scale survey compiled by Official Monetary and Financial Institutions Forum (OMFIF), a global research and advisory group. The OMFIF research publication Global Public Investor (GPI) 2014, launched on June 17 is the first comprehensive survey of $29.1 trillion worth of investments held by 400 public sector institutions in 162 countries. The report focuses on investments by 157 central banks, 156 public pension funds and 87 sovereign funds, underlines growing similarities among different categories of public entities owning assets equivalent to 40% of world output.

The assets of these 400 Global Public Investors comprise $13.2 trillion (including gold) at central banks, $9.4 trillion at public pension funds and $6.5 trillion at sovereign wealth funds.

Public pension funds and sovereign wealth funds are well known to be large holders of shares on international stock markets. But it seems they now have rivals from unexpected sources:

One is China's State Administration of Foreign Exchange (SAFE), part of the People's Bank of China, the biggest overall public sector investor, with $3.9 trillion under management, well ahead of the Bank of Japan and Japan's Government Pension Investment Fund (GPIF), each with $1.3 trillion.

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Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books including the best-selling WEB OF DEBT. In THE PUBLIC BANK SOLUTION, her latest book, she explores successful public banking models historically and (more...)
 

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Yes, Ellen Brown, perfectly stated, it is in the p... by Clarc King on Saturday, Jun 21, 2014 at 7:19:07 PM
Mr. King I wish there were some movement in the di... by lila york on Saturday, Jun 21, 2014 at 7:36:30 PM
Seems to me that this suggests the real solution i... by June Genis on Sunday, Jun 22, 2014 at 10:29:01 AM
I came across this video on Bitcoin - Bitcoin 101.... by Jack Flanders on Sunday, Jun 22, 2014 at 11:42:35 AM
LilaThe Larouchepac is the present movement that e... by Janet Gaudiello on Sunday, Jun 22, 2014 at 11:27:49 AM
Very simply it starts with you and me and others, ... by Clarc King on Sunday, Jun 22, 2014 at 1:06:02 PM
Yes, the newly released documents that describe th... by Mari Eliza on Sunday, Jun 22, 2014 at 1:30:16 PM
I'd say the MSM, owned by the Wall St. cabal, is a... by Clarc King on Sunday, Jun 22, 2014 at 2:00:04 PM
"Banks should not be the exclusive creators of mon... by jtenn on Saturday, Jun 21, 2014 at 9:07:09 PM
jtennArticle 1, Section 8 of the U.S. Constitution... by Janet Gaudiello on Sunday, Jun 22, 2014 at 11:39:26 AM
Yes Janet, add the fraud of monetarism, the usury ... by Clarc King on Sunday, Jun 22, 2014 at 1:40:06 PM
You know this. I know this. Most everyone else has... by jtenn on Monday, Jun 23, 2014 at 9:40:06 PM
Globalization, economic warfare against the United... by Clarc King on Sunday, Jun 22, 2014 at 1:23:39 PM
Answer to question below.Argentina."What is to sto... by Mark Breza on Sunday, Jun 22, 2014 at 11:22:46 AM
The United States is the 800 pound guerrilla in th... by Clarc King on Sunday, Jun 22, 2014 at 1:34:40 PM
That is precisely what the Chinese are doing. They... by jtenn on Monday, Jun 23, 2014 at 9:43:26 PM
A couple of things come to mind, and they are very... by E. J. N. on Sunday, Jun 22, 2014 at 2:00:12 PM
Unfortunately, as years pass, there will be less ... by Pal Palsimon on Monday, Jun 23, 2014 at 2:58:35 AM
Pal, to me it matters not what the leaders of the ... by E. J. N. on Monday, Jun 23, 2014 at 12:16:39 PM
Unfortunately, we don't have enough of your kind o... by Pal Palsimon on Monday, Jun 23, 2014 at 5:39:09 PM
Just for perspective, here is the current Big Conc... by Daniel Geery on Sunday, Jun 22, 2014 at 2:42:30 PM
Speaking as an I.T. professional with over 2 decad... by Scott Baker on Monday, Jun 23, 2014 at 9:55:15 AM
Fascinating. And explains much of my angst over th... by Daniel Geery on Monday, Jun 23, 2014 at 10:50:20 AM
It's good you are testing your backup person! It ... by Scott Baker on Monday, Jun 23, 2014 at 12:29:28 PM
I would love to see your comments on this Quick Li... by Pal Palsimon on Monday, Jun 23, 2014 at 5:41:16 PM
The situation has annoyed me constantly; changes i... by Pal Palsimon on Tuesday, Jun 24, 2014 at 2:16:46 AM
I wouldn't assume that. With bigness comes comple... by Scott Baker on Tuesday, Jun 24, 2014 at 3:26:08 AM
Most investors now believe three things about the ... by Lance Brofman on Sunday, Jun 22, 2014 at 4:02:26 PM
Thank-you for posting what we have all thought wou... by thepiffler on Sunday, Jun 22, 2014 at 5:29:24 PM
I think you really lost it." It is the PBoC, which... by BFalcon on Sunday, Jun 22, 2014 at 9:39:41 PM
"Finance is the new form of warfare" Warfare true,... by Mike Kirchubel on Monday, Jun 23, 2014 at 9:23:38 AM